Consumer confidence lifts in August as outlook improves

2:25 PM Thursday Aug 9, 2012

File photo / Richard Robinson

New Zealand consumer confidence lifted in August as households feel more optimistic about their financial well-being.

The ANZ-Roy Morgan Consumer Confidence index rose to 114.5 in August from 110.5 in July, where a reading above 100 indicated there are more optimists than pessimists. The Current Conditions index advanced 3 points to 114, while the Future Conditions index increased 5 points to 115.

"The level isn't stellar, and it still flags some caution," Cameron Bagrie, chief economist at ANZ New Zealand said in his report. "However, at least it is moving in the right direction."

Today's survey showed gains in all five sub-segments that make up consumer confidence, with people feeling more optimistic about the next 12 months and the five years. It is still seen as a good time to buy a big ticket item, with the net balance unchanged at 25 per cent. Pessimistic perceptions towards the general economy improved to minus 6 from minus 10.

Bagrie said the improvement was driven by lifts in property prices, low interest rates and the prospect of these persisting for a while. At the same time signs of improvement in labour market incomes with solid lifts in average gross weekly earnings bolstered upbeat confidence, he said.

The survey came after government figures showed New Zealand's unemployment rate unexpectedly rose 0.1 per cent points to 6.8 per cent in the second quarter, the highest level since June 2010.

Separately, national property values rose 2.2 per cent in the three months ended July 31 as homes in Auckland and Christchurch continue to appreciate amid a shortage of supply, according to government valuer Quotable Value.

On a regional basis, Auckland recorded the largest increase in confidence up 9.2 per cent points to 119. Wellington was the lowest on 105 per cent points, little changed from 105.7 in July.

Confidence of consumers older than 25 rebounded in August, while the 25 to 34 age group was the only group to report a decline.

"Confidence levels tend to be higher for the younger cohorts, with those ages 50 years or older remaining the least confident age group," Bagrie said.

Inflation expectations eased to 3.1 per cent from 3.3 per cent a month earlier.

Meanwhile, confidence among farmers took another fall this month in light of prevailing uncertainty in global markets, softer commodity prices, and the expectation that the run of good seasonal conditions wouls not continue.